Correlation Between Dongxing Sec and Success Electronics

Can any of the company-specific risk be diversified away by investing in both Dongxing Sec and Success Electronics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dongxing Sec and Success Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dongxing Sec Co and Success Electronics, you can compare the effects of market volatilities on Dongxing Sec and Success Electronics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dongxing Sec with a short position of Success Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongxing Sec and Success Electronics.

Diversification Opportunities for Dongxing Sec and Success Electronics

0.33

Correlation Coefficient

Dongxing Sec  Success Electronics

Weak diversification

The 3 months correlation between Dongxing and Success is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Success Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Success Electronics and Dongxing Sec is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dongxing Sec Co are associated (or correlated) with Success Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Success Electronics has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Success Electronics go up and down completely randomly.

Pair Corralation between Dongxing Sec and Success Electronics

Assuming the 90 days trading horizon Dongxing Sec is expected to generate 1.37 times less return on investment than Success Electronics. In addition to that, Dongxing Sec is 1.06 times more volatile than Success Electronics. It trades about 0.05 of its total potential returns per unit of risk. Success Electronics is currently generating about 0.07 per unit of volatility. If you would invest  348.00  in Success Electronics on October 23, 2024 and sell it today you would earn a total of  39.00  from holding Success Electronics or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dongxing Sec Co  vs.  Success Electronics

Dongxing Sec

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongxing Sec may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Success Electronics

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Success Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Success Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dongxing Sec and Success Electronics

The main advantage of trading using opposite Dongxing Sec and Success Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongxing Sec position performs unexpectedly, Success Electronics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Success Electronics will offset losses from the drop in Success Electronics' long position.

The idea behind Dongxing Sec Co and Success Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.